Correlation Between Jpmorgan Strategic and Health Care

Can any of the company-specific risk be diversified away by investing in both Jpmorgan Strategic and Health Care at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Jpmorgan Strategic and Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jpmorgan Strategic Income and Health Care Select, you can compare the effects of market volatilities on Jpmorgan Strategic and Health Care and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Jpmorgan Strategic with a short position of Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Strategic and Health Care.

Diversification Opportunities for Jpmorgan Strategic and Health Care

-0.84

Correlation Coefficient

Jpmorgan Strategic  Health Care

Pay attention - limited upside

The 3 months correlation between Jpmorgan and Health is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Strategic Income and Health Care Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Select and Jpmorgan Strategic is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Jpmorgan Strategic Income are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Select has no effect on the direction of Jpmorgan Strategic i.e., Jpmorgan Strategic and Health Care go up and down completely randomly.

Pair Corralation between Jpmorgan Strategic and Health Care

Assuming the 90 days horizon Jpmorgan Strategic Income is expected to generate 0.08 times more return on investment than Health Care. However, Jpmorgan Strategic Income is 12.86 times less risky than Health Care. It trades about 0.34 of its potential returns per unit of risk. Health Care Select is currently generating about -0.06 per unit of risk. If you would invest  1,133  in Jpmorgan Strategic Income on October 26, 2024 and sell it today you would earn a total of  14.00  from holding Jpmorgan Strategic Income or generate 1.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Jpmorgan Strategic Income  vs.  Health Care Select

Pair Trading with Jpmorgan Strategic and Health Care

The main advantage of trading using opposite Jpmorgan Strategic and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jpmorgan Strategic position performs unexpectedly, Health Care can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Health Care will offset losses from the drop in Health Care's long position.

The idea behind Jpmorgan Strategic Income and Health Care Select pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.